Financial Regulatory Reform

Floor Speech

BREAK IN TRANSCRIPT

Mr. DURBIN. Mr. President, in about 1 hour, the Senate will convene for a vote. It is one of the few times this week that the Senate comes together. Those who are following our proceedings will see Senators from all over the United States gather on the floor of the Senate. That gathering will be for a crucial vote as to whether the Republican filibuster on Wall Street reform will continue or end. This will be the third time this week we have given the Republicans an opportunity to join us in a bipartisan effort to bring real reform to Wall Street and the big banks on Wall Street.

Twice now we have failed to get a single Republican who will stand and vote with us for Wall Street reform. I don't understand it. Certainly, they understand what we have been through as a nation with this recession. They realize that some $16 trillion of value has been yanked out of our economy, yanked out of savings accounts and 401(k)s and out of business ledgers. They know what has happened when businesses have failed and millions of Americans are out of work and they realize the root cause of this was on Wall Street, with some of their dealings that, frankly, were outrageous, and now we are trying to change them. Yet we have failed to come up with one Republican Senator who will vote to begin the debate on Wall Street reform--not one.

A colleague of mine analyzed what Wall Street is doing to lobby against this bill. He took the amount of money that Wall Street banks and financial institutions are paying their lobbyists on Capitol Hill and divided it and came up with a number. They are spending $120,000 a day to stop Wall Street reform--$120,000 a day, 2 to 2 1/2 times the average income of an American, the Wall Street banks are spending each day to stop this bill.

So far they have been successful. They have convinced every Republican Senator to vote against beginning the debate on this bill. They have convinced every Republican Senator to vote to continue the filibuster because the Wall Street lobbyists know that if this bill doesn't come to the floor, they are not going to have to change their ways. They can keep doing what they have done for so long and they do not have to face any new laws, any new oversight, any new regulation.

Of course, the American people know what has happened too. They saw the hearings yesterday. Senator Carl Levin of Michigan, who was just on the floor, presided over the Permanent Subcommittee of Investigations of the Committee on Homeland Security. Carl Levin told me he had worked for 16 months in preparation for that hearing, trying to understand the complexity of Wall Street and how it works. He brought in the highest executives from Goldman Sachs and asked them point blank to explain what they had been doing. We saw it on television, last night and this morning.

When the men who were called before him, who have literally made millions of dollars out of this investment scheme, were asked to explain it--something as basic as this--how could they sell a product to a consumer at Goldman Sachs without disclosing that Goldman Sachs was betting that consumer would lose money, that is what happened. They were so-called shorting the market, meaning they were betting huge sums of money that the investment they were selling to their customers was going to fail. These men sat before that committee and said that is business. That is how we do business.

That is the sort of thing that has to come to an end in this country. There is a man by the name of Paul Krugman, who writes for the New York Times. He wrote an article about what happened at Goldman Sachs, which led to their investigation as well as charges that have been lodged against them. I would like to read from this article, from April 19 of this year, where Mr. Krugman says:

We've known for some time that Goldman Sachs and other firms marketed mortgage-backed securities even as they sought to make profits by betting that such securities would plunge in value. This practice, however, while arguably reprehensible, wasn't illegal. But now the S.E.C. is charging that Goldman created and marketed securities that were deliberately designed to fail, so that an important client could make money off that failure.

Krugman writes, ``That's what I would call looting.''

He goes on to say, this legislation we are considering contains consumer financial protection, the strongest law in the history of the United States. Here is what Krugman writes:

For one thing, an independent consumer protection bureau could have helped limit predatory lending. Another provision in the proposed Senate bill,--

Which is before us, being filibustered by the Republicans--

requiring that lenders retain 5 percent of the value of loans they make, would have limited the practice of making bad loans and quickly selling them off to unwary investors.

He goes on to write:

The main moral you should draw from the charges against Goldman, though, doesn't involve the fine print of reform; it involves the urgent need to change Wall Street.

Listening to financial industrial lobbyists and the Republican politicians who have been huddling with them, you would think that everything will be fine as long as the Federal Government promises not to do any more bailouts. But that is totally wrong, not just because no such promise would be credible, but the fact is that much of the financial industry has become a racket, a game in which a handful of people are lavishly paid to mislead and exploit consumers and investors. If we do not lower the boom on those practices, the racket will just go on.

Every day that the Republican filibuster of Wall Street reform continues is another day that we will fail to take into consideration this bill, this Financial Stability Act, which is pending before the Senate. Each day that the Republican filibuster continues is a victory for the Wall Street lobbyists. That is just wrong. Have we learned nothing from the recession we are in? Have we learned nothing from the hearing yesterday where these men, these multimillionaires who pay themselves lavishly sat and said they thought it was perfectly acceptable to sell a product to one of their customers that they were betting would fail with their own money? They think that is just fine. It is part of the casino they run on Wall Street.

Well, John Ensign of Nevada took exception to that and said: That gives Las Vegas casinos a bad name because we deal with things honestly, and people know the odds are against them. It is not like the situation on Wall Street where people are misled into believing they are making a good bet when the house is betting against them. And that is what happened at Goldman Sachs. That is the sort of thing that will come to an end.

What this bill does is it holds Wall Street accountable. We are fighting to hold them accountable for the reckless gambling that led to our recession and the loss of 8 million jobs in America--8 million. There are 8 million families affected by these activities on Wall Street, and the Republican filibuster would stop us from even considering changes to the regulation and oversight of Wall Street activities.

We want to end taxpayer bailouts for good. I listened to the criticism of this bill. I try to draw an analogy which I heard Senator Menendez of New Jersey use. What we try to do in this bill is to create, for lack of a better term, under Senator Menendez's analysis, a prepaid burial plan. What it basically means is that if your company--financial institution--is going to go out of business, we want to make sure we have put enough money in the bank to pay for funeral expenses--literally the winding down and liquidation of the company--because we don't want the American taxpayer to do it. So this bill creates a so-called prepaid corporate funeral fund and says, let the banks themselves fund it so the taxpayers do not have to. I think that is reasonable.

The Republican approach, though, is to say: Well, let's just bet there is enough money left in the estate to pay for the funeral. Maybe there will be and maybe there will not be. In that case, the taxpayers are on the hook again. That is not a good outcome. So trying to create some assurance that there is money to liquidate and wind down these financial institutions protects taxpayers from another bailout. The Republicans object to that, but they have not come up with a better solution.

The third thing we want to do is to put commerce and consumers in control in America. I do not have to remind most people, if you open a bank account, if you enter into a mortgage, if you decide to sign up for a credit card, go off to buy an automobile, sign up for a student loan, sign up for a retirement plan, they usually send you some legal documents along the way.

At a real estate closing--I have been to many as a consumer and a lawyer--they give you a stack of papers and you sit there at the bank, with your spouse nearby, signing these papers, one after the other after the other, until after 20 or 30 minutes it is all over, they hand you the keys, and you head on out to see your new house. Well, most people do not know what is in those papers. Even if a lawyer is sitting at the table with them, it is unlikely that they have parsed every single word. As a result, a lot of people end up signing up for things they did not understand. We want to change that. I do not think it is too much to ask that these financial obligations and instruments be in plain English so the average person knows what they are getting into.

What we want to do in this bill is to empower consumers so that you can make the right choice for yourself, your family, your business, and your future. We do not want you to fall victim to the tricks and traps of the latest little turn of a phrase that can turn your world upside down. That is why the consumer financial protection law is included in this bill. It is the strongest consumer financial protection law in the history of the United States.

There are lobbyists lined up outside this Chamber trying to carve out exceptions. They are trying to argue: Wait a minute, we do not want this to apply to pawn brokers; let's give them a pass. We do not want this to apply to casinos; let's give them a pass. We do not want this to apply to automobile companies, auto agencies; let's give them a pass. They want to have loopholes and carve-outs for the favorite industries they represent.

I was at the airport coming out here this week, and one of these folks, a good, local businessman in the suburbs of Chicago, came up and said: I am an honest businessman. I did not cause the recession. I have never had a problem in my life. People do not complain about me. The Better Business Bureau gives me the highest of marks. Why should I be regulated? Why should the government look at what I am doing?

And I said to him: If you are doing everything you said, you should not worry about it. What you ought to worry about is your competitor down the street who is fleecing people and giving folks in your industry a bad name.

These carve-outs and these changes--and they have been arguing for them all morning on the Republican side of the aisle--are the reason they are holding up the bill. They have promised the lobbyists that they will cut out loopholes in this bill for the special interest groups that are represented by them. They would exempt the automobile dealers, some of them would exempt the home loan industry, and some of them would exempt pawn brokers. The exemptions could be as long as your arm, exemptions as long as the list of lobbyists who are trying to push these loopholes.

I don't think that is a good outcome. I don't believe we should be creating lobbyist loopholes in this law. Let's hold everyone to the same legal standard, a good-faith standard of real disclosure and honest dealings with consumers; clear English language whether you are taking out a credit card, buying a car, buying a home, a student loan, or a retirement benefit for the rest of your life. Shouldn't the language be clear? We have to make that clear as part of this.

At some point, I hope the Republicans who are filibustering this Wall Street reform will decide, if they have a good cause and they want to bring it to the floor, that they can open the debate, provide their side of the story, and urge the Members of the Senate to go along with them. If a majority agrees, it will be in the bill. If not, it will be outside the bill.

If that sounds vaguely familiar, like the Senate you read about when you were going to school, it is. It is what we are supposed to be doing. This is not supposed to be an empty Chamber of desks here waiting as we launch day to day another filibuster vote. Ninety-nine Senators are supposed to be out here with me in heated debate over the biggest financial issue of our generation. Instead, the Republicans continue to filibuster, stop the debate, refuse to go to amendments, refuse to take their special pleadings on what they want to achieve in this bill to the court of public opinion. That is not fair, and it is not right.

It is also interesting, when we were in the middle of the health care debate, how many times those on the other side of the aisle stood up and said: Do you know what the problem is here? The Democrats are trying to write this bill behind closed doors. They will not bring it out to the floor of the Senate.

Now fast forward to the current debate. What are the Republicans saying? You know what the problem is here--the Democrats refuse to change this bill behind closed doors. They want to amend it right here on the Senate floor.

It seems to me they are in an inconsistent position.

If they believe these amendments are good amendments, they should not be afraid to offer them in front of the American people. But if they want to cook a deal behind closed doors, I do have some problems with that. If they have a good cause, they should bring it to the floor and deal with it. Shady institutions are not good for this country and sunlight is good, transparency is good. I believe it is time we stand up for the American people and say that reckless gambling on Wall Street with the future of the American economy is absolutely unacceptable.

Some of them argue: Well, let's go after the biggest financial institutions. Let's not blame the little people who are involved in the credit business.

There was an article in the New York Times on Sunday, April 18, by Jim Dwyer. He was talking about credit card companies turning $2.50 slices of pizza into a $37.50 slice. They did it, of course, when they bought a slice of pizza with a debit card that was over the limit and the penalty was $35. The question on that fee was, Were the people notified ahead of time what they were going to face? I don't think it is unfair to notify people what they have to pay. I believe this kind of disclosure is important to confidence in our economy.

I am urging my colleagues to stand and join us in making sure we have a chance to bring this bill to the floor. In less than 1 hour, this empty floor will be filled with Senators, Democrats and Republicans. We need 60 Senators to step up and say: This recession has taught us a lesson. We are not going to let America go through this again because of the greed and malpractice of those in Wall Street and financial institutions. We are going to change the system. We are going to require them to be more transparent, more accountable, to put their own money on the table, and to be honest with their customers. We are going to require financial institutions to make full disclosure to the people they deal with so that those customers can be empowered to make the right decisions for themselves and their families. We are not going to exclude certain businesses in America and say they can do whatever they like when what is at stake is the financial security of a family.

Everybody is going to be held to the same basic standard of honesty, a standard which good businesses live up to every single day. I urge the good businesses across America not to stand in defense of the bottom feeders. I urge them to stand up for good business practices which are part of the free market system and have made our Nation so strong as the entrepreneurial spirit has blossomed into more jobs and economic growth. That spirit needs to be regained, the confidence needs be regained.

The embarrassing chapter yesterday in the Committee on Homeland Security, when these Wall Street titans came in and said they saw nothing wrong with misleading their customers into millions of dollars of losses, has to come to an end. It will only end when the Republican filibuster ends on the floor of the Senate.

I will hope at 12:20 when this vote begins that at least a handful of Republicans will stand up and say: Enough is enough. Let's move forward with reform. Let's move forward to putting the American economy back on track.

I yield the floor and suggest the absence of a quorum.

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